Updated: 2/25/2011 4:24 PM ET|
You won the lottery! Now what?
Everyone knows what to do first: Jump for joy. But the moves you make after that are crucial, and missteps could cost you dearly.
Michael Lang's boss had just two $5 bills in his wallet when Lang came by to collect for the weekly office lottery pool.
The boss hesitated after opening his wallet, so Lang reached over and plucked out one of the bills. "You don't want to be sitting here if we win," Lang remembers saying.
The next morning, Lang was home sick from his job as a child-support investigator. When the boss called, Lang made his apologies and offered to come in if they really needed him. "Forget about that!" his boss said. "We won the lottery!"
That was in 2006, when 13 members of the Missouri child-support-enforcement team shared a $224.2 million Powerball jackpot. For the past five years, Lang has been living the life that lottery-ticket buyers dream about when they shell out their cash.
And it's a good life, Lang is quick to point out. He was able to retire early and pursue a long-held dream: owning a hunting and fishing lodge. But it's also been a stranger and more complex journey than he could have imagined.
"I thank God every day for being blessed this way," Lang said. "(But) everybody does take some advantage of you when they find out you have money."
We talked a while back about what Lang has learned about how to win the lottery. Such as:
Don't rush to claim the prize
One of Lang's regrets was that he let his co-workers' enthusiasm trump his natural caution. A former St. Louis police officer, Lang was wary of the attention and bad guys the publicity could attract, but he wound up acceding to the group's wish to claim the winnings shortly after the prize was announced.
If he had it to do over again, Lang said, he would put off claiming the prize while lining up the financial professionals he needed to help him manage his share.
"I just wanted to be able to prepare for it," Lang said.
If you value your privacy, you may have the option to collect your winnings without a news conference, although your name and hometown typically must be made public.
Another tip: Get an unlisted phone number as soon as you can. People from around the globe are going to try to reach out and touch you for loans, gifts, charitable contributions and funding for their great business ideas.
Get your team together
At a minimum, you'll need an accountant, a lawyer and a financial planner. Don't expect much help from the lottery itself, because it can't risk the legal liability of offering advice. Plenty of financial professionals will offer to assist you -- Lang said he and his co-winners received "hundreds" of pitches from financial advisers of all stripes -- but without significant research you won't be able to tell the crooks and incompetents from those who know what they're talking about.
Lang said many of his encounters with these advisers weren't good. One lawyer told Lang he could quickly prepare a trust for $17,000 -- a trust Lang actually had done for $2,500. A financial adviser Lang interviewed but opted not to use sent him a bill for $450.
"I sat in his office and drank a bottled water, and he wanted me to pay $450," Lang said. "I asked him to itemize what he did for me that was worth $450, and I never heard from him again."
You may not be able to rely on friends and family for referrals, unless your nearest and dearest happen to be multimillionaires with advisers skilled in managing big sums. You may instead want to find out who advises the wealthy in your community and start your interviews there. But don't assume the rich always know what they're doing. Think Bernie Madoff.
The Certified Financial Planner Board of Standards has advice about choosing a planner, and the American Institute of CPAs can direct you to a certified public accountant with a financial planning designation. The National Association of Personal Financial Advisors represents fee-only financial planners, many of whom specialize in "high-net-worth individuals" -- that is, rich people.
Lang started his search for legal advisers by asking who represented the largest companies in St. Louis. A Catholic, he settled on the company that advised a Catholic church in his area.
VIDEO ON MSN MONEY
Ok so you won the LOTTERY.
Now the problems start...everyone and i do mean everyone will want a hand out, in my opnion invest in blue stocks..Ciggerates, Beer and Condoms, think about it, people need or want to drink, smoke and have sex, mebbee like a investment of say 50 million in each, and a dash into the free energy market say 25 million(solar, hydrogen or wind power) and live off the investment interest.
Live modestly but well. I personally would build a foundation for writers and artist and inventors of game design and their own works(writers, artists, producers etc etc etc) give people the chance that they should have, and earn it
My own opinon of course. but if you do get that lambo or the ferrrari, they do break down often and are hugely expensive to fix. in other words, dont go nuts, live within what you are used to.
Rodentwarrior forgot to add that the commission should make sure that any advisor that it allows to "work with" the lottery winner must guarantee that the investments it recommends to the winner will not lose money. If the winner takes the lump sum, the advisor must guarantee at least a 10% return each year, and tax-free too!
Also, the commission should make sure that the winner's heirs will receive all of their righful inheritance free of estate tax and that any investments they make from the inhritance will not lose money either. They get the same 10% guarantee for their lifetimes, and tax-free too!
And so on, and so on. This should result in hundreds of good-paying jobs for the commission in keeping track of all these details and reviewing winners, family members, advisors, investments, income and estate planning issues, new tax laws, etc.
In fact, everyone should be a lottery winner. It isn't fair to have just a lucky few. Utopia!
Frist of all why didnt they ask God for help in handleing the money and most people who win the lottery dont even think about God or give there church any money, or even pay there tithes on the winnings. That is why most people who win the lottery are broke in a few years they gey caught up in all the attention they get from winning the money, and just spend money on dumb stuff.
One thing state lottery commissions should consider when it comes to cash options, because some of the higher ticket scratch games also offer grand prizes and lifetime prizes payable by cash option, is to have a clearing house for the legal and financial advisers of the winners. I would even go as far to say that the only way you should get the cash option is when the clearing house officials say you do.
The advisers should meet certain criteria. They should be licensed to practice in the winner's home state. They should have zero censures or license suspensions/revocations in any state, not just the winner's home state. They should have documentable experience handling and representing a financial interest which will be at least the size of a small mutual fund.
When the state lottery commission is faced with a winner who chooses cash option and insists they can manage the money themselves, the commission should demand documentable proof from the winner that they are actually capable of doing the job themselves. Almost all of them simply are not. They do not have the mental ability to recognize the size of what they just won. They will be drawn to ideas that are lame-brained and stand a very good chance of costing them every dime of their winnings; the favorite used to be to throw it in a savings account and live off the interest, which meant if the bank went bust you'd lose everything above the FDIC cap. If they get drawn to an idea that is outright illegal and they can't figure it out for themselves, pleading ignorance will find them no sympathy in a court of law. These are the kind of lottery winners who really do need to be protected from themselves; that's one of the reasons why there are annuity payments and the state lottery commission should impose it when it's obvious that the prize winner is clueless and will only get themselves into trouble.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
MORE PERSONAL FINANCE SECTIONS & TOOLS